Global insight: New data challenge for European retailers

This story was originally published in Planet Retail's IT & Supply Chain newsletter on Friday 19 September.

Retailers and food manufacturers are facing a tight schedule to achieve compliance with EU regulation 1169/2011. This demands more adequate product information on product packaging and online shop catalogues from 2015. The issue is becoming a hot topic on the industry’s agenda as failure to supply acceptable product data will trigger fines from regulators.

GS1 Germany has launched its new master data service.

More transparency should be welcomed, though, as recurring food scandals have shaken consumer confidence in the industry. However, the new regulation leaves the industry with huge challenges as product data needs to be available online, in-store or via mobile at the right time and in the right quality. The main obstacle for grocers also operating online shops, such as Tesco, Ahold, Sainsbury's and Rewe, is to ensure that information about nutrition and allergens, as well as ingredients’ origins are correctly displayed prior to the customer’s purchase. So far, the available data often lacks sufficiency and accuracy and is stored in a variety of incompatible formats and systems.

A remedy could come from GS1, as the standardisation body of the global retail and FMCG industry has put this squarely in its sights. At last week’s ECR conference for the German-speaking countries in Stuttgart, GS1 Germany presented its strategy for tackling the challenge.

Through its newly-founded subsidiary Smart Data One, GS1 Germany has launched services such as the semi-automated capturing of all relevant data, including product images, through its agency partner Zippel Media. While Smart Data One’s services are based on GS1’s process and quality standards, the data is ultimately provided through the data pool of GS1’s subsidiary 1 World Sync. Using this solution, retailers and suppliers will not only ensure compliance with EU legislation, but will also benefit from efficiencies in marketing, logistics and communication. It will also allow sending consistent information and images to smartphones and in-store digital screens. Consumers, on the other hand, will be able to enjoy more adequate information and make better-informed purchasing decisions.

The implementation of the EU regulation is still not cut and dried as retailers and suppliers still disagree over what happens with items’ GTIN in the event of product modifications. While retailers tend to prefer an entirely new GTIN, suppliers are lobbying for version numbers. It is also yet to be clarified as to what happens with GTINs of private label items if they are modified and where the product information will be stored.

All these issues add to complexity (and thus costs), especially if the smallest product amendments entail the creation of a new product number. This raises the question of whether the shared processes and standards can be rolled out to not only the likes of Unilever and Nestlé, but also to the thousands of small manufacturers that deliver to the retailers. Already, it has become public knowledge that GS1 Europe has asked Brussels for additional time to comply with regulation 1169/2011.

Even before taking into account the requirements of the new EU regulation, retailers are struggling with the low quality of the product master data they receive from suppliers. Germany’s Rewe Group has already started working on this problem with its Project Aqua. This aims to improve the quality of product master data and the retailer’s corresponding systems. Project Aqua foresees that master data supplied by consumer goods manufacturers will first go into a central SAP system before being distributed to the different regions.

However, higher data standards add more complexity to processes, which in the past have proved to rarely run smoothly between retailers and suppliers. Obstacles to the EU regulation do not only arise from poor data from suppliers, but also from retailers themselves. Some companies have their own master data strategy and are asking suppliers for data beyond the standard remit.

Although the new legal requirements will certainly cause significant short-term pain to the industry, it is without any doubt a necessary step to force manufacturers and retailers to improve the quality and consistency of consumer information. Services such as those from Smart Data One, Brandbank or Gladson could provide a remedy here and help retailers and manufacturers comply with the new legislation and become fit for global collaboration and standardisation.

Essential Retail caught up with PCI Security Standards Council international director, Jeremy King, to talk all things related to data security in retail. King is speaking at RBTE in London, this afternoon.